Cost of ‘charity care’ at South Sound hospitals is falling as result of federal health reform

Reversing a years long trend, many of Washington’s nearly 100 hospitals are seeing a drop in charity care requests and payouts since the Affordable Care Act took full effect in January.

Data being collected is still a bit iffy in the eyes of the Washington State Hospital Association. But spokeswoman Mary Kay Clunies-Ross says early signs are that the state’s network of public and private hospitals may see a 30 percent reduction this year in charity care, which covers the costs of treatment for some low-income patients.

This gain may be offset by the federal health care reform law’s cut in federal funding for Medicare patients and other negative impacts on hospitals’ bottom lines. But if trends continue, hospitals would see relief in an area of their budgets that grew to $1.4 billion in 2013, according to data compiled by the Washington Department of Health.

At Providence St. Peter Hospital in Olympia, the care donated to low-income applicants fell dramatically in the first three months of the year – to just below $8 million compared to $24.2 million in free services during the same time period in 2013. Through August, the hospital’s total outlay was $24 million – which puts it on target to cut about a third of its $62.8 million in free services given in all of 2013, officials said last week.

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“There is no question charity care has dropped. That is a good thing because the Medicaid expansion and the exchange is beginning to work in getting people covered,” Providence St. Peter spokeswoman Deborah Shawver explained. “That’s essential to improving access to care. This is what we wanted. It means people can see their primary care doctors and have their conditions treated before they become more serious.”

On the other side of Olympia, Capital Medical Center chief executive Jim Geist said charity care has fallen to $692,395 for the first six months this year, compared to $1.6 million in the first half of 2013.

Figures were less promising at MultiCare Tacoma General Hospital and St. Joseph Medical Center in Tacoma.

First quarter figures at Tacoma General were up slightly — to $20 million this year compared to $17.7 million a year ago, according to DOH. But hospital officials said the rest of the year has seen a decline in charity care provided at the system’s hospitals in Tacoma and Puyallup.

“We don’t have final second quarter numbers, but anecdotally we saw a drop in the write-off of charges associated with charity care in the second quarter of 2014 at Good Samaritan and Tacoma General/Allenmore,” MultiCare spokeswoman Marce Edwards said.

“The category of patients who came to us with no insurance decreased for the first six months of the year mostly because of the expansion of Medicaid coverage in our state. These patients would have previously been eligible for charity care under our financial assistance policy.”

At St. Joseph, charity care outlays fell from the first quarter this year to the second — and were on pace to come in lower than the $47.8 million in charity care given in 2013, based on DOH data.

Despite the promising news, Geist, Shawver and other hospital officials are expressing caution, because the savings vary by hospital and could be offset by other higher costs. The biggest financial hit looming is a provision that cuts Medicare payments to hospitals by several billion dollars, and the hit to Washington is about $4 billion over the next decade, Clunies-Ross said.

There also is the impact of seeing more people on Medicaid, which reimburses hospitals for only about 70 percent of real costs, according to Shawver. Also, insurance plans with high deductibles are leaving some consumers unable to pay their share, which Clunies-Ross and Shawver say may increase the number of bad debt charges that hospitals have to write off.

Statewide, “hospitals are being cautious about how that balance is going to work out,” Shawver said. “So it’s a little early to say hospitals are going to be in great financial shape. We don’t know how over the next 10 years it’s going to look.”

Geist said he’s worried Congress might not continue funding for expanded Medicaid, which he considers a highly successful effort that has provided “great relief” for hospitals and opportunities for patients. Statewide, the ACA has extended care to more than a half-million Washingtonians who didn’t have it before, largely through the expansion of Medicaid rolls.

Clunies-Ross said time will tell more in a year or two exactly what the full impact of Obamacare is on hospitals. But so far, she’s hopeful.

“Do we feel good about seeing the decline in charity care? No question,” Clunies-Ross said. “It’s what everyone wanted to see. It is what (modeling showed) we would see after having a good ... robust enrollment period. Unlike a lot of states, our enrollment went very smoothly.”